- After a volatile 2022, silver prices are set to surge over the next few years
- Skyrocketing demand and limited supply are pushing silver prices up
- Investors are turning to silver alongside gold for its safe haven qualities during economic uncertainty
Experts are Bullish on Silver
If you don’t have silver in your portfolio, now is the time to add it. After a volatile year, silver prices are set to surge. Exponentially increasing demand, limited supply and continued economic uncertainty could send silver into record territory.
Silver earned its nickname as the ‘restless metal’ in 2022. After recovering from price drops, silver demand spiked to an all-time high. It’s been on an upward trend since mid-October, adding 30% to its price. The rise was partially fueled by news that China is loosening its Covid restrictions.
Silver prices were also boosted by the prospect of lower interest rates in the future. Like gold, silver tends to go down when rates go up. That’s because investors are drawn to interest bearing assets over precious metals.
The upswing in silver prices coincided with news that demand is projected to hit a new record of 1.21 billion ounces.1 This will result in a second year of supply deficit. “At 194 million ounces, this (deficit) will be a multi-decade high and four times the level seen in 2021,” a recent report from the Silver Institute states. Global silver output is projected to increase by only 1 percent. Any fresh supply will be quickly absorbed. Mining production is being limited by skyrocketing costs for energy, supplies and transportation.2
“Silver is in a unique place. Many factors are transitioning silver into an industrial metal. This, with supply issues, government regulations and current pricing, is poising silver for a breakout.” says Steve Cope, President & CEO of Silver Viper Minerals.3
Industrial demand accounts for half of total silver consumption. Silver is vital to the production of solar power cells. The market for photovoltaics alone could support the surge in the metal’s price. This demand will grow as government’s push renewable energy policies. The European Commission just mandated rooftop solar panels be installed on all public and commercial buildings in the next five years.
Silver demand is also being driven by the electric car market. Electric vehicle manufacturer’s need for silver will climb from 45 million ounces in 2017 to 70 million ounces by 2030.4
Investment demand for silver is increasing as well. Investors are turning to silver for the same reason they look to gold – to hedge against inflation and risk. Sales of silver coins and bars for investment jumped 36%. Investors bought 278.7 million ounces, the highest amount since 2015. “Retail investors in North America and Europe, motivated by safe-haven and inflationary concerns, took advantage of periodically lower silver prices to purchase coins and bars,” said the Silver Institute.5
Frank J. Basa is Chairman & CEO of Canada Silver Cobalt Works. He said, “I expect that increasing demand for silver for solar panels, along with growing investor interest for silver as a hedge against inflation, will together drive the price of silver higher in the coming year.”6
Future Silver Prices
Analysts forecast silver will hit $34 in 2023. Some are predicting that it will break $48 by 2024 under the right conditions. Silver will move higher as the dollar drops and inflation remains high.
Data indicates that silver is likely to outperform gold in 2025 and 2026. Silver is historically undervalued relative to gold right now. Making it an attractive investment opportunity. Supply trends cannot keep up with longer-term demands. Green technology demands will increase even if there is a global recession.
The gold to silver ratio is also sending a powerful buy signal. The gold to silver ratio represents the number of silver ounces it takes to buy a single ounce of gold. Historically speaking, the gold to silver ratio has rested somewhere between 15 and 10 to 1, reflecting the average supply of each metal.
The ratio now is like what it was just prior to the 2008 financial crisis and recession, when it also hovered around 80. Following the financial meltdown, silver rallied 400% over three years.7
Unstoppable demand and limited supply are combining with inflationary pressures to create a perfect storm for silver prices to erupt. You can easily add silver to a self-directed IRA like our Gold IRA. Contact us today to learn more.